Kazakhstan - The Times Of Central Asia

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Economy

Kazakhstan Aims to Nearly Triple Investment in the Economy by 2029

Kazakhstan plans to significantly increase investment in its economy over the next five years, aiming to nearly triple current levels. However, officials from the Ministry of National Economy acknowledge that the primary challenge lies not in securing additional funds but in the shortage of high-quality investment projects. Shortage of Viable Projects At a recent meeting of the Expert Council under the Ministry of National Economy, Deputy Minister Arman Kasenov stated that the ratio of domestic investment to GDP currently stands at a modest 14-15%, a figure he described as objectively low. “To achieve higher rates of economic growth, investments need to increase 2.75 times, from $40 billion in 2024 to $103 billion by 2029,” Kasenov stated. To help reach this target, the government plans to allocate KZT 1 trillion (approximately $2 billion) through the state holding company Baiterek to stimulate business lending. This amount is expected to catalyze additional credit lines totaling KZT 8 trillion (around $15.9 billion). Still, Kasenov stressed that financing alone is not enough. “The real issue is the lack of quality projects,” Kasenov said. “This problem has been flagged by international development finance institutions. When we talk about increasing investment from $40 billion to $103 billion, it’s not just about capital, it's about where and how that capital is deployed.” Targeting High-Return Sectors To ensure impactful investment, the Kazakh government is prioritizing support for highly productive and export-oriented projects. These are concentrated in key sectors such as metallurgy, oil and gas, petrochemicals, and agriculture. Rustam Karagoyshin, the head of Baiterek Holding, outlined the financing model for investment projects, which consists of 60% market funding and 40% state-backed lending. In 2025, Baiterek plans to disburse a total of KZT 8 trillion in project financing, with KZT 3.75 trillion (around $7.4 billion) provided in the national currency. “Our main objective is to unify lending rates at 12.6% for end consumers. Standardizing rates will enable second-tier banks to participate across nearly all sectors where Baiterek operates today,” Karagoyshin said. Foreign Investment Outlook As The Times of Central Asia previously reported, Kazakhstan is looking to attract more foreign direct investment following a notable decline in 2023. Amid growing concerns about resource nationalism, the government is eager to position itself as a stable and attractive destination for international capital.

Opinion

Opinion: Kazakhstan Caught in the Crossfire of Caspian Pipeline Strikes

The developing peace process between Russia and Ukraine, initiated by U.S. President Donald Trump, offers a glimmer of hope for stability. Yet Kazakhstan finds itself in a difficult position, caught in the crosshairs of a conflict that continues to spill across its borders, at least economically. Over the past few months, the Caspian Pipeline Consortium (CPC), through which more than 80% of Kazakhstan’s oil is exported, has become the target of repeated drone attacks linked to the war in Ukraine. Despite a tentative ceasefire agreement, damage to CPC infrastructure continues. In mid-March, the Kavkazskaya oil depot in Russia’s Krasnodar region, part of the CPC system, suffered a major fire following a suspected Ukrainian drone attack. According to Reuters, the blaze lasted nearly a week before being extinguished, raising concerns about the vulnerability of energy infrastructure in the region. Western outlets have confirmed that the CPC’s Kropotkinskaya pumping station was targeted around the same period. S&P Global reported that drone strikes on March 18-19 damaged a key facility transferring oil from rail tankers to the pipeline system. Business Insider noted the attack caused serious financial disruption, particularly for CPC shareholders such as Chevron-led Tengizchevroil. Kazakhstani journalist Oleg Chervinsky has stated that the CPC was included in a ceasefire moratorium on mutual strikes, reportedly agreed upon by both sides. If accurate, the March attacks could suggest a violation of those terms. AP News has also highlighted ambiguity in the ceasefire framework, with Russia and Ukraine each accusing the other of non-compliance. The economic stakes for Kazakhstan are high. According to oil and gas analyst Olzhas Baidildinov, the CPC distributed $1.3 billion in dividends in 2024, with KazMunayGas, Kazakhstan’s national oil company, receiving an estimated $250 million, approximately $85 million of which was channeled into the state budget. At a time when Kazakhstan is still recovering from a budget deficit, further disruptions to CPC operations are more than technical, they threaten fiscal stability. Yet the response from Astana has remained subdued. Political analyst Andrei Chebotarev recalled that following an an earlier attack in February, the Kazakh Ministry of Foreign Affairs pledged to engage with its Ukrainian counterparts. What emerged from those talks remains unclear. Chebotarev also noted that Ukraine has yet to appoint a new ambassador to Kazakhstan, despite generally constructive relations. Fellow analyst Daniyar Ashimbayev has speculated that geopolitical rivalries may be at play, including competition with the Baku-Tbilisi-Ceyhan pipeline and Kazakhstan’s recent overproduction within OPEC+, though these claims remain unverified. In a brief official comment, Deputy Foreign Minister Alibek Kuantyrov confirmed that Kazakhstan remains in contact with Ukraine and that discussions are ongoing. Meanwhile, the Ministry of Energy has stated that Kazakh oil continues to flow through the CPC pipeline without restriction. Yet, for many observers, Kazakhstan’s measured diplomacy, perhaps aimed at avoiding antagonism with either side, is beginning to feel inadequate. As key infrastructure remains exposed to cross-border conflict, the case for a firmer and more public diplomatic posture grows stronger.

Drones

Mysterious Drones on Kazakhstan’s Border with Russia: Third Drone Found in a Month

A third unidentified drone has been discovered in Kazakhstan’s West Kazakhstan region near the Russian border, heightening security concerns and prompting official investigations. Law enforcement and relevant agencies are currently inspecting the latest find. New Fragments in Zhanibek District The most recent wreckage, believed to be part of an unmanned aerial vehicle (UAV), was found in Zhanibek district. According to a statement from the West Kazakhstan Region Police Department, the debris was located in a remote, uninhabited area. “The West Kazakhstan Region Police Department, together with authorized services, is conducting verification activities regarding the discovery of objects resembling fragments of an unmanned aerial vehicle,” the department stated. Authorities are working to determine the circumstances surrounding the incident, including the drone's origin and potential flight path. Third Case in a Month This is the third such incident in the region within the span of a month. As previously reported by The Times of Central Asia, on March 18, residents of Atameken village, approximately 60 kilometers north of Taskala, reported the crash of a drone approximately three meters in length. A similar incident occurred on February 18 in the village of Uyaly, Bokeyordinsky district, where authorities recovered an unidentified flying object measuring 120 centimeters in length. In both previous cases, police and emergency services responded to secure and analyze the sites. Assumptions and Unofficial Theories While there has been no official identification of the drones, some regional media outlets suggest a possible match between one of the recovered UAVs and the French-made "Crecerelle" reconnaissance drone, produced by Sagem. The lack of confirmation has done little to quell speculation, particularly amid rising concerns about the drones’ potential connection to the war in Ukraine. In Russia's neighboring Saratov region, Ukrainian UAVs have repeatedly targeted strategic infrastructure, including airfields and fuel depots. This geographic proximity raises questions about whether Kazakhstan is inadvertently becoming a transit zone, or even a crash zone, for drones involved in that conflict. Local officials and residents alike are increasingly uneasy about the repeated discoveries. Investigations remain ongoing, with experts aiming to identify the drones’ origins and assess any security risks. Law enforcement agencies have refrained from commenting on possible links between the drone crashes and the military conflict in Ukraine until further evidence is gathered.

Cryptocurrency

Central Asia’s Crypto Gamble: Growth Amid Uncertainty

Central Asian countries are approaching the cryptocurrency and crypto-mining industry at varying speeds. While some are just beginning to explore the sector, others have already taken significant, albeit sometimes contradictory, steps. Kazakhstan: From Mining Powerhouse to Regulatory Caution Kazakhstan once emerged as a global leader in bitcoin mining. Between mid-2021 and early 2022, the country ranked third in the world in terms of bitcoin mining capacity, accounting for 13.22% of global computing power, trailing only the United States and China. This boom was fueled by low electricity costs, favorable tax conditions, and an influx of miners fleeing stricter regulations in China. However, the rapid growth strained Kazakhstan’s energy infrastructure. The Ministry of Energy reported that while annual electricity consumption had previously grown by an average of 2%, in 2021 it surged by 6.1% and up to 12% in the densely populated southern energy zone. Digital mining was cited as the primary cause. By early 2025, Kazakhstan’s share of global mining capacity had dropped to just 1.4%, placing it outside the top five globally. Although around 60 companies are currently active in the sector, some operations have stalled. Tax legislation has tightened since 2022, with miners required to pay 1-2 tenge per kilowatt-hour depending on the energy source. Illegal mining and unlicensed exchanges remain a challenge; in 2024 alone, 12 criminal cases were launched against underground platforms. Despite these setbacks, experts see potential for a more sustainable and regulated industry. The Astana International Financial Center (AIFC) has become the hub for cryptocurrency operations. A 2023 law on digital assets and updated rules from the Astana Financial Services Authority (AFSA) in 2024 have laid a more comprehensive legal foundation, including provisions on cybersecurity and anti-money laundering. Over 10 licensed cryptocurrency exchanges now operate in Kazakhstan, including global names like Binance, Bybit, and Bitfinex Securities. New initiatives such as the digital tenge and the Cryptocard aim to further integrate blockchain into daily financial transactions. President Kassym-Jomart Tokayev reaffirmed the government's commitment to digital transformation in March 2025: “The development of the digital asset industry and blockchain technology plays a major role. Urgent measures must be taken to liberalize regulation, ensure the legal circulation of digital assets and crypto exchanges, and attract investment in digital mining,” he said. Uzbekistan: State-Supported Growth Uzbekistan has made blockchain and digital assets a policy priority. The National Agency for Perspective Projects (NAPP) is the main regulatory body. Between 2022 and 2024, the agency issued 14 licenses to cryptocurrency companies. The UzNEX exchange, an internationally licensed platform, has played a key role in developing the crypto market in both Uzbekistan and the wider region. Its services include crypto asset trading, staking, and NFT transactions. In 2024, it expanded its list of supported cryptocurrencies (including Toncoin) and plans to launch a digital art platform. Total trading volume exceeded $1 billion in 2024. Kyrgyzstan: Building a Legal Framework Since 2022, Kyrgyzstan has actively developed its regulatory environment for digital assets. The key legislation is the Law on Virtual Assets, which outlines...

Investments

Chinese Investor to Launch $400 Million Cotton Cluster in Southern Kazakhstan

Chinese company Xinjiang Lihua (Group) Co., Ltd. plans to invest nearly $400 million to establish a cotton-textile cluster in Kazakhstan’s Turkestan region. The announcement was made by Zhang Qihai, Chairman of the Board of Directors of Xinjiang Lihua, during a meeting with Kazakhstan’s Prime Minister Olzhas Bektenov. The large-scale investment project will be implemented within the TURAN Special Economic Zone, located in southern Kazakhstan. It envisions a vertically integrated cotton agro-industrial complex, from cultivation to the production of finished textile goods, including yarn, fabric, and clothing. More than 50,000 hectares of land have been allocated for cotton cultivation. The project also includes the construction of ten factories. Two of these will manufacture drip irrigation systems using modern water-saving technologies. Four others will handle the primary processing of cotton near the fields. The remaining four facilities, including garment, dyeing, and finishing factories, will produce the final textile products. The total investment exceeds 200 billion tenge (approximately $398 million), and the cluster is expected to create 3,000 permanent jobs in the region. To support the project’s needs, a plant for producing polyvinyl chloride (PVC) pipes has already been launched, and construction of the textile factories is underway. Xinjiang Lihua is also developing an irrigation system, including a canal network fed by a dedicated pumping station. Chairman Zhang Qihai praised Kazakhstan’s favorable investment climate and the region’s suitable agricultural conditions. He noted that the first finished products from the cluster are scheduled for release by October this year. “The creation of a cotton-textile cluster in Turkestan Region contributes to increasing the added value of domestic products, promoting agricultural development through processing, and enhancing the country’s export potential,” said Prime Minister Olzhas Bektenov. “The government will provide all necessary support for this initiative.” As previously reported by The Times of Central Asia, China also plans to support the establishment of a Scientific and Technical Innovation Center for Hydrogen Energy in Kazakhstan.

Oil

Britain’s Victoria Oil & Gas Files Multimillion-Dollar Lawsuit Against Kazakhstan

British company Victoria Oil & Gas has filed a multimillion-dollar lawsuit against the government of Kazakhstan under the Energy Charter Treaty. The development was reported by Energy Monitor, a Telegram channel focused on Kazakhstan’s energy sector. Dispute Centers on Kemerkol Oil Field The legal proceedings are registered with the International Centre for Settlement of Investment Disputes (ICSID), a World Bank-affiliated body. The case stems from a longstanding dispute over the Kemerkol oil field in Kazakhstan's Atyrau region. In 2005, Victoria Oil & Gas acquired a 100% stake in the field from Saga Creek Gold Ltd for $8.5 million. After drilling several wells, the company estimated the field’s geological reserves at approximately 15 million tons of oil. Unexplained Contract Termination In 2008, Kazakhstan’s authorities terminated the subsoil use contract without providing an official explanation. That same year, Kazakh company Bakyt Tau purchased the rights to the field from Saga Creek Gold Ltd for 360 million tenge (approximately $3 million at the 2008 exchange rate). In 2016, Bakyt Tau transferred the development license to Up-Nafta Operating for 1.36 billion tenge (nearly $4 million at the 2016 rate). The company continued exploration and drilling operations. By 2022, the State Reserves Commission reported the following: C1 category geological reserves: 2.35 million tons; recoverable: 588,000 tons C2 category reserves: 652,000 tons; recoverable: 29,000 tons As of 2023, actual oil production totaled just 14,700 tons, with 12 active wells and an average water cut of 79%. Legal Strategy or Political Statement? Given the field’s modest reserves and limited output, some experts suggest the lawsuit may be more political than economic. Energy Monitor noted: “The field is clearly not worth hundreds of millions of dollars, unlike the Stati case involving the Borankol and Tolkyn fields. Most likely, the lawsuit has a political context rather than an economic one.” Victoria Oil & Gas first raised the prospect of arbitration in April 2021. The case has now been officially registered under ICSID case number ARB/25/13, signaling the start of formal legal proceedings. Implications for Kazakhstan While the precise amount of the claim has not been disclosed, Victoria Oil & Gas is expected to seek compensation for lost investments and projected profits. However, given the field’s limited commercial viability, many industry observers question the likelihood of a favorable ruling. The case adds to Kazakhstan’s growing docket of international arbitrations, including the high-profile Stati brothers’ case. Analysts warn the dispute could affect the country’s investment climate and its bargaining position in future energy negotiations.